Investorist recently conducted a survey looking into the issue of how many off the plan properties are being purchased in Australia, where are they being purchased, and by whom?
The survey looks deep into the questions with 201 of the country’s leading developers and agents.
Where are these properties being developed?
CEO for Investorist, Jon Ellis said: “I think everyone in the off-plan industry knows Melbourne's been a bit of a hot spot lately for off plan property development. There's been a lot of towers going up in Melbourne, followed secondly by Sydney, and third is Brisbane.”
Are we seeing plenty of Chinese investors?
The government has recently done a lot in an attempt to dampen enthusiasm from overseas investors, particularly the Chinese. While this has seen a drop in investments from this area of the world, there are still huge numbers in play.
Jon said: “It's interesting. The respondents came back and they've seen a huge dip off with Chinese investors. Over 20 per cent reduction in buyers coming from that market. Of all foreign investors, respondents still believe 60 per cent of them will come from China this year. So, a huge number of buyers coming out of that market.”
What trends have there been in owner-occupiers compared to investors?
We are supposed to have seen a shift towards owner occupiers after new regulations from the bank and other authorities. But is this actually happening?
Jon explained: “Yeah, absolutely. Look, we've seen a substantial reduction in investors and we've seen owner-occupiers taking up a larger portion of those buyers, I think based on the reduction in investors.
“Investors, mind you, still makeup about 60 per cent of the purchases for off plan property. So still a very significant percentage, but certainly 40 per cent owner-occupiers is not something we've seen historically on the off-plan property, but we're now saying mass.”
How has loan availability impacted the industry?
Seen by many as one of the biggest issues in Australian off-plan property, loan availability has impacted the market dramatically. The secondary market is still dominated by owner-occupiers, but investors are still extremely important. So, are loans the real issue?
Jon argued: “Hugely. It is the single biggest issue in the off-plan property industry. I'd actually say it's the single biggest issue in the property market as a whole. But investors are very important in that market. If you look at the economy as a whole, investors are what drives building and construction, which is one of our largest industries. Banking is the biggest issue.
“We've had loans tightening up for foreign investors. We've to some extent turned off the tap for probably six months, but now we're seeing them re-emerge in the market. We're seeing new lending products come in to satisfy them, and we're seeing probably a resurgence inshore investors now in Australia.
“While we're seeing the local owner-occupiers being really hit. How much bank loan restrictions in Australia have affected your local investor client. Seventy-seven per cent of respondents said that they are worse than 10 per cent down because of that. More than 50 per cent of them is down by more than 30 per cent. So, it's really big swings against investors because of loans.”
Is oversupply an issue?
There have been countless reports of over-supply in Australia over the past year, but what is seen as an issue to sellers and developers in one area of the country is seen as a non-problem in other places.
Jon explained: “If you're a seller and you're developing in Fortitude Valley in Brisbane, South Bank in Melbourne, you'd probably say to me that there's an oversupply. But if you're a developer developing in close to the city in Sydney, or you're developing a town outlet in the eastern suburbs or boutique developments in the eastern suburbs of Melbourne, you're not reporting any supply.
“And interestingly enough, more than 80 per cent of sellers said they had bigger issues than oversupply in their market. All of them are seeing it and seeing it in pockets, but thankfully for 80 per cent of developers, it's not a big issue for them.”
Jon also believes the majority of developers and agents are expecting to sell more property in the next 12 months than the last year, with over 75% stating they were overwhelmingly sure of the fact. There is a strong sense of optimism around the industry for the year ahead.
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